MTH (Mikes Train House) is a modern distributor of well detailed locomotives which they design and have
manufactured by Samhongsa in Korea. MTH previously made several Lionel
authorized Standard gauge reissues. MTH is currently posing a major challenge to Lionel for market share.
They produce a full range of 'O' gauge including starter sets and transformers, O-27, and O Scale locomotives,
rolling stock and accessories. These products are complemented by a fast-growing line of 1/32 Scale G gauge
offerings. Tinplate standard gauge and HO products are also manufactured.
MTH Electric Trains, formerly Mike's Train House, is an American toy train and model railroad designer,
importer, and manufacturer, based in Columbia, Maryland. It is a privately held company. MTH's founder,
Mike Wolf, started assembling and selling trains at the age of 12 in 1973 for
Williams Electric Trains, which had begun producing reproductions of trains
manufactured by Lionel Corporation in the early 1970s. Wolf first saw his life's work stretch out in front
of him in 1977, the day Williams enlisted his help at the York, Pa., train show, the biggest on the
railroading calendar. Hobbyists flock there to talk, to see the latest models, to fill the trunks
of their cars with engines and boxcars and accessories. Williams positioned Wolf behind the parts
table, where the line often snaked practically out of sight. Wolf, who got to keep 10% of the take,
remembers selling $150,000 worth of parts at a single weekend show.
By 1980, Wolf was operating a mail order business
out of his parents' home, selling Williams trains and parts out of his bedroom. When Williams decided to end
its line of Lionel Standard gauge and 'O' gauge reproductions, Wolf bought the tooling and continued
building the replicas. Although many published reports have stated that Williams had acquired original
Lionel tooling, both Wolf and Jerry Williams deny this claim.
At age 22, a year younger than Joshua Lionel Cowen had been when he founded Lionel, Wolf was
becoming a player in the industry. In fact, he was something of a second coming of Cowen. Wolf, too,
topped out at 5-foot-5. And he would prove just as competitive, self-promoting, and audacious as the
man he considered his role model.
From 1983 to 1987, MTH marketed the reproduction trains on its own. In 1987, Lionel approached Samhongsa,
MTH's subcontractor in South Korea, about manufacturing Standard Gauge trains that bore the Lionel name.
Samhongsa directed Lionel to Wolf. Before the end of 1987, MTH became a Lionel subcontractor, allowing MTH's
Lionel reproductions to bear the Lionel name and be marketed by Lionel itself. MTH made 100% of what was
called at the time Lionel Classics. As part of the agreement, MTH sold Lionel trains as part of its
mail-order business. By the early 1990's, MTH was the second-largest mail-order Lionel dealer in the country.
MTH had a troubled relationship with Lionel, and it ended in April 1993, when MTH decided to re-enter
the market with an 'O' scale model of the General Electric Dash 8 diesel locomotive, which Wolf had first
offered to produce for Lionel. Turned down, Wolf decided to market the locomotive himself, citing reduced
orders from Lionel for MTH's replicas as the reason. Then-Lionel CEO Richard Kughn, who learned of the
decision from a flyer at a train show, responded by cancelling MTH's Lionel dealership.
At around the same time, Wolf had become a hidden 50% partner in a start-up called
Weaver Brass that built and sold brass 'O' scale steam engines. Wolf was
competing against Lionel at the same time he worked for it. After Kughn gave MTH the boot, MTH in turn filed
an anti-trust suit against Lionel, which was settled out of court in 1995. MTH then expanded its product
line, adding the former Lionel vintage reproductions, reproductions of equipment from other manufacturers,
and new original designs. By 1998, MTH was the largest manufacturer of 'O' gauge trains, eclipsing Lionel's
market share by approximately $60 million to $50 million. At its peak, MTH employed about 135 people.
MTH also produced many sets of New York City Subway cars as well as a set of Chicago El cars. The NYC
Subway sets were licensed by the MTA. Lionel currently holds this license in 'O' scale while
Walthers holds the license in HO scale after acquiring Life-Like.
The license transfer is in part due to MTH producing sets covered in graffiti.
MTH and Lionel developed a rivalry similar to that between Lionel and Ives in the
1930's and Lionel and American Flyer in the 1940s and 1950s. Although their train cars
are the same size and can operate as part of the same train, the two companies' locomotives use their
own proprietary electronic control systems. MTH uses a system called Digital Command System (DCS),
which is capable of operating MTH engines as well as engines using Lionel's Trainmaster Command Control
(TMCC), used by many other 'O' gauge manufacturers, and Digital Command Control (DCC), which is an open
industry standard used by most two-rail scales.
In December 1999, 3 former employees of Samhongsa rival Korea Brass were convicted of industrial espionage
for stealing and using proprietary MTH designs to produce models for Lionel. In April 2000, MTH again sued
Lionel, this time for industrial espionage, citing as evidence original electronic drawing files and the
precedent set in the South Korean criminal courts. On June 7, 2004, a jury in Detroit, Michigan found
Lionel guilty and awarded MTH $40.8 million. The following day, Lionel announced it would appeal the verdict.
On December 14, 2006, the judgment was overturned on appeal, citing legal mistakes in the jury trial, and a
new trial ordered.
MTH has also traded lawsuits with Quantum Sound Industries, whose technology is used to add electronic
sound to model locomotives from various manufacturers. MTH's critics also say the company patented some
elements of DCC, which was supposed to be an unencumbered open standard. MTH made $9.6 million in profit
in 1997. The number dropped to $7.8 million in 1998, $6.2 million in 1999, and less than $1 million in 2000.
MTH lost some $815,000 in 2001. As of June 2004, MTH has 57 employees
and annual sales of about US$40 million. News reports from the fall of 2004 estimated MTH's annual sales at
closer to $30 million. As a privately held company, MTH does not officially release sales figures. In its
2007 reorganization plan, Lionel estimated MTH's annual revenue at about $30 million and stated that MTH
is the second-largest manufacturer of 'O' gauge trains in terms of market share.
Although MTH is disliked by Lionel collectors because its reproductions have lowered the market value of
all but the most pristine vintage Lionel equipment, and disliked by some other hobbyists because of its
aggressive marketing and legal tactics, MTH is widely credited with bringing innovations into a hobby
that had changed very little since the 1950's, as well as lowering prices.
On December 30, 2005, the Union Pacific Railroad sued MTH for using its logos, along with the logos of
various fallen flag railroads it has acquired, without a license. UP had previously sued other manufacturers,
most notably Lionel and Athearn, for their use of the logos. At the time of the suit,
UP had 104 licensees. The suit requested that MTH stop using the trademarks, pay damages, and send UP-branded
inventory to the railroad to be destroyed. On November 8, 2006 M.T.H. Electric Trains and Union Pacific
Railroad announced that they have amicably settled the trademark infringement case that U.P. filed against
M.T.H in Omaha, Nebraska federal court. The settlement benefits both parties, as well the entire model
railroad industry. It allows Union Pacific to continue to protect its intellectual property, and authorizes
M.T.H.’s use of Union Pacific’s trademarks and paint designs on model train products and accessories. Union
Pacific has also decided to change its trademark-licensing program so that model railroad manufacturers will
no longer have to pay a royalty, and will enjoy a perpetual license to use Union Pacific trademarks and paint
designs on model railroad products.
Lionel three-rail 'O' gauge track dates to 1915, and the technology that necessitated the creation of
a center rail has long ago been surpassed. Today, MTH is offering many of its high-end locomotives in a
convertible two-rail/three-rail configuration. To change a locomotive from one type of track to the other,
all that's involved is the removal or addition of center-rail pickup rollers and the flip of a slide switch
discreetly located on the locomotive.
MTH Electric Trains has gone from a very small business operated out of a room in Mike’s boyhood
home, to an 80+ employee company producing 'O' Gauge, No. 1 Gauge and now HO Gauge trains and accessories
that are unique, appealing, simple to operate, built to last, and fairly priced.
Link to MTH Web Site.
